Finance Minister Kikis Kazamias has expressed discontent over the way a number credit rating agencies operate, creating concerns in markets and turning to become “part of the problem”.
Asked, after a meeting with President of the Republic Demetris Christofias, what is the situation of the economy, following the latest downgrading by Moody’s of the long-term deposit and debt ratings of three Cypriot banks, Kazamias said that at present, “the situation is under control”.
He said there is however, concern as there are countries which have similar concerns and have a triple A rating.
Kazamias said that there is discontent of the way some credit rating agencies are operating, which makes them part of the problem.
He explained that these agencies make predictions without substantial background, causing investors concern. Then they try to verify their predications after causing apprehensions in the markets, he added.
“This method is unacceptable”, he said.
Kazamias said that tomorrow the government will complete the discussion on social grants and a relevant bill will be sent to the House of Representatives Monday.
He also said that the government is examining additional austerity measures and when it is ready, and this is a matter of a few days, these will be announced.
Moody's Investors Service has also downgraded the long-term deposit and debt ratings of three Cypriot banks, namely Bank of Cyprus, Marfin Popular Bank and Hellenic Bank.
Moody's has also placed the ratings of the three banks on review for further downgrade.
On October 27, Standard & Poor’s Rating Services lowered its long-term sovereign credit rating on the Republic of Cyprus to ‘BBB’ from ‘BBB+’, prompting the Finance Ministry of Cyprus to call on political parties to vote the 2012 budget.
On August 26th the House of Representatives approved the first of two packages of austerity measures aiming at fiscal consolidation. Presenting the 2012 state budget, Finance Minister Kazamias said it contains structural measures aiming to avert negative developments to the Cypriot economy.
It provides for total revenues of 6.22 billion euro, compared with 5.64 billion of 2011 and total expenditures, excluding loan payments, of 7.54 billion euro compared with 8.01 billion of the 2011 state budget.
The budget also includes provisions for a 10% reduction in entry-level salaries for civil servants, abolition of 1100 vacant positions in the civil service, continuation of the freezing of procedures to fill up vacancies and for reducing by 200 million euro social benefits both by lowering the level of benefits and by introducing income criteria for certain benefits.
